The European Union has blocked the latest Ryanair takeover bid for Aer Lingus.

It was expected the EU Commission would reject the €694 million bid from Micheal O'Leary.

Ryanair said earlier this month that the decision was being made despite it meeting every competition concern raised by the EU.

Ryanair's Robin Kiely said "Ryanair has no alternative but to appeal any prohibition decision and we expect to get a fair hearing at the European Courts, as we haven't received one from Commissioner Almunia and his case team".

"This decision is clearly a political one to meet the narrow, vested interests of the Irish Government and is not based on competition law" he added.

Aer Lingus has welcomed the move, saying that the offer should never have been made.

"The series of inadequate remedy offers presented by Ryanair only underlines the view that Ryanair made its offer without any reasonable belief that it could obtain clearance", Aer Lingus CEO Christoph Mueller said in a statement.

Government 'not supportive' of move

Speaking earlier this month, Transport Minister Leo Varadkar said the government would not 'support or cooperate' with the bid.

"Certainly it is the view of the government...that we don't believe that the Ryanair proposed takeover of Aer Lingus is in the country's interest" he said.

"It'll damage competition, damage connectivity and it'll cost us jobs" he added.

The carrier had offered to eliminate all competitive overlapping routes between the two airlines.

It says airline group IAG had committed to take over Ryanair’s and Aer Lingus’ entire London-Gatwick operations, and Flybe had also committed to take over 43 Aer Lingus UK and European routes.

In its decision, the Commission said the combination of Ryanair and Aer Lingus would have led to very high market shares on all 46 routes.

• On 28 routes the proposed merger would have created an outright monopoly.
• On 11 further routes, the only alleged competitive constraint to the merged entity would have come from charter airlines. However, this constraint would have remained weak because charter airlines have a very different business model.
• Finally, on 7 routes Ryanair and Aer Lingus operate alongside other scheduled carriers. In addition to their very high market shares Ryanair and Aer Lingus are very close competitors - if not each other's closest competitors – on these routes. The reason is that the business model of competing scheduled operators tends to focus on bringing connecting passengers to their own network hubs - typical examples are British Airways (to London Heathrow), Lufthansa (to Frankfurt) and Air France (to Paris Charles de Gaulle) – as opposed to the point-to-point connections that Ryanair and Aer Lingus offer.

Newstalk's Business Editor Ian Guider says this comes as no surprise.